Retail sector sees March sales crash

Tuesday 12 April 2011 06:56 BST

More evidence of the crisis on the UK high street emerged today after the British Retail Consortium (BRC) revealed the biggest sales drop in its history.

With consumers reining in their spending on all but essential purchases, the BRC said total sales in March were down 1.9% on a year ago in the biggest decline since the start of the trade body's monthly survey in 1995.

The earlier timing of Easter last year had a major bearing on the figures but the BRC said it was clear consumers did not want spend "unless they really had to", despite a growing number of special offers.

It also warned that weaker retailers may not be able to carry on if such low levels of spending continue, sparking fears of a bloodbath on the high street.

Helen Dickinson, head of retail at survey partner KPMG, said: "We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards.

"Many retailers will not be able to sustain this ongoing weakness in demand beyond the short-term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding."

Retailers have issued a string of gloomy updates in recent weeks. with Mothercare, HMV and Currys and PC World parent Dixons Retail all warning on profits and others highlighting testing conditions.

Chains are feeling the pinch after household spending power suffered its first fall in 30 years as wages fail to keep up with uncomfortably high inflation.

BRC director general Stephen Robertson said: "Falling disposable incomes and the fear of worse to come means people don't want to spend. There's only so much discounts and promotions can do to overcome that."

He added that the pressures had been made worse when National Insurance contributions rose earlier this month.

Like-for-like sales were down 3.5% in their worst performance since April 2005 and internet sales showed their slowest growth since records began in 2008.

Clothes and book sales suffered their largest declines since 2009 and 2005 respectively.

DIY and gardening also continued to struggle as the uncertain housing market caused people to delay improvement work.

Consumers also put off buying big ticket electrical items, with any sales being largely driven by promotions.